Institutions and Caribbean Economic Performance: Insights from Jamaica

Abstract

We explore the impact of social institutions on economic performance in Jamaica through a reinterpretation of the plantation economic model. In its original form, the plantation model fails to develop a causal link between the plantation legacy and persistent underdevelopment. Despite its marginalization, the model remains useful for discussions on growth and development. Consequently, we offer a reappraisal using the causal insights from Kenneth Sokoloff and Stanley Engerman. We use two examples to demonstrate how inequality encourages the formation of institutions that are inconsistent with growth, and an empirical analysis to confirm the hypothesized relationship between inequality, institutions, and economic development. Since inequality is expected to influence growth indirectly, we use a structural specification, which follows William Easterly's recent test of Sokoloff and Engerman's argument. Our reliance on a time-series specification is unique. We demonstrate that the expectation that, on average, inequality and growth is negatively related and that institutions may compromise growth are accurate for Jamaica, the most cited Caribbean nation in the current discourse. Our results carry several policy implications, including support for the recent calls in Jamaica for political restructuring. However, both the paucity of similar studies and the importance of the implications for sustainable growth and development demand further analyses.

Addressing food and nutrition insecurity in the Caribbean through domestic smallholder farming system innovation

“…In the context of agricultural development, understanding how colonial institutional legacies have fostered export production in the SIDS of the CARICOM region requires examination of the role played by domestic policy and institutions (Rodrik et al 2004;Seligson and Passé-Smith 2008). Recognizing this, Timms (2008) traced agricultural policy development in the Caribbean from the colonial mercantilist interests to the most recent 2008 food price hikes and offered three factors driving CARICOM's export-oriented focus: (1) in-country resistance to changing the status quo by the planter class and political elites; (2) lack of resources to support institutional change, first by colonial and then ex-colonial powers who have been concerned primarily with their own positive balance of trade and utilizing aid to sustain such terms of trade; and (3) most recently, neoliberal trade policies that have disadvantaged small local producers through market flooding with cheaper food produced in industrial agricultural systems (see also Elliott and Palmer 2008).…”